question archive A computer manufacturer produces three types of devices: mobile phones, tablets, and computers
A computer manufacturer produces three types of devices: mobile phones, tablets, and computers
Subject:BusinessPrice: Bought3
A computer manufacturer produces three types of devices: mobile phones, tablets, and computers. For the production of these three devices you have the following information: Phone Tablet Computer Material cost per unit £90.00 £140.00 £315.00 Direct labor hours per unit 2.00 2.50 4.00 Budgeted units 15,00,000.00 9,00,000.00 12,00,000 1,00,50,000 Labor cost per hour £8 £7.96 ( 80,000,000 / 10,050,000) Overhead costs per annum Utilities £20,000,000 Rent £15,000,000 Audit and legal £5,000,000 Administrative staff £40,000,000 Total £80,000,000 ABC analysis suggested that overhead costs are distributed to the three products according to the table below: Overheads Phone Tablet Computer Phone Tablet Computer Utilities £8,000,000 £5,000,000 £7,000,000 80,00,000 50,00,000 70,00,000 Rent £8,250,000 £2,250,000 £4,500,000 82,50,000 22,50,000 45,00,000 Audit and legal £2,900,000 £1,250,000 £850,000 29,00,000 12,50,000 8,50,000 Administrative staff £23,200,000 £6,000,000 £10,800,000 2,32,00,000 60,00,000 1,08,00,000 4,23,50,000 1,45,00,000 2,31,50,000 For each of the three products, the company aims at a different percentage for profit. Under the full absorption costing method and the targeted profit percentage, the prices of the three products should be: Phone Tablet Computer Full costing price £170.69 £233.87 £435.67
